How Maker and the eDollar works ● Maker is a set of smart contracts deployed on the Ethereum blockchain. ● Maker enables the issuance of eDollar against good collateral posted by Issuers on the Ethereum blockchain. This creates a collateralized debt position (CDP) that consists of the posted collateral, along with a debt that is equal to the amount of EUSD issued. The issued EUSD is instantly added to the Issuers balance. ● Good collateral is defined as blockchain assets that can be locked inside Makers Smart Asset Bank, which has very high collateral to debt ratio requirements to minimize the risk of default. Examples are Bitcoin, Ether, Makercoin, Augur Reputation and similar blockchain­based tokens, as well as IOU’s for commodities such as gold and other resources, as well as company stock and legal deeds with a proper regulatory framework. The default minimum collateral to debt ratio for issuance is 200%. ● Collateral types, collateral ratio requirements, margin call rates and debt ceilings are determined by Governors, one of the two types of delegates that are voted in by Makercoin holders. The Governors abilities to change these parameters are restricted within hard boundaries voted on by the Makercoin holders. ● The eDollar is a cryptocurrency that is pegged to the US dollar (peg rate: 1 EUSD = 1 USD). A pool of decentralized, independent price feeds from Augur and similar decentralized data feed services is the data source for the collateral prices and the status of the peg. ● Issuers must pay an interest rate on their debt, that varies daily depending on the status of the peg. ● The interest rate is manipulated to enforce the peg in the long run. If the independent price feeds determine that EUSD is valued above the peg, the interest rate decreases by 1 percent. If the independent price feeds determine that EUSD is valued below the peg, the interest rate increases by 1 percent. If the peg is holding, the governors can choose to modify the interest rate with up to 0.5 percent in either direction. This adjustment happens every 24 hours. ● The peg is defined as holding if the independent price feeds report a price between 99 and 101 US cents per EUSD. ● Half of the income from the interest payments are put in the Maker Vault, Makers eDollar account.